Homes in the foreclosure process sold at an average 26% discount in the second quarter, as almost one fourth of all transactions involved properties in some stage of mortgage distress, according to RealtyTrac Inc.

A total of 248,534 homes that sold in the period had received a default or auction notice or been seized by banks, RealtyTrac said in a report Thursday. The number was up 5%, from the first quarter, and down 20%, from a year earlier, according to the Irvine, Calif., data seller.

"We're still clearly building up more distressed inventory," Rick Sharga, RealtyTrac's senior vice president, said in an interview. "That will either put downward pressure on prices or keep them from going up."

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